(a) A security interest in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, instruments, investment property or negotiable documents may be perfected by filing. (b) Except as otherwise provided in Subsections (c) and (d) of Section 55-9-315 NMSA 1978 for proceeds: (1) a security interest in a deposit account may be perfected only by control under Section 55-9-314 NMSA 1978; (2) and except as otherwise provided in Subsection (d) of Section 55-9-308 NMSA 1978, a security interest in a letter-of-credit right may be perfected only by control under Section 55-9-314 NMSA 1978; (3) a security interest in tangible money may be perfected only by the secured party's taking possession under Section 55-9-313 NMSA 1978; and (4) a security interest in electronic money may be perfected only by control under Section 55-9-314 NMSA 1978. (c) While goods are in the possession of a bailee that has issued a negotiable document covering the goods: (1) a security interest in the goods may be perfected by perfecting a security interest in the document; and (2) a security interest perfected in the document has priority over any security interest that becomes perfected in the goods by another method during that time. (d) While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by: (1) issuance of a document in the name of the secured party; (2) the bailee's receipt of notification of the secured party's interest; or (3) filing as to the goods. (e) A security interest in certificated securities, negotiable documents or instruments is perfected without filing or the taking of possession or control for a period of twenty days from the time it attaches to the extent that it arises for new value given under a signed security agreement. (f) A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for twenty days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of: (1) ultimate sale or exchange; or (2) loading, unloading, storing, shipping, transshipping, manufacturing, processing or otherwise dealing with them in a manner preliminary to their sale or exchange. (g) A perfected security interest in a certificated security or instrument remains perfected for twenty days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of: (1) ultimate sale or exchange; or (2) presentation, collection, enforcement, renewal or registration of transfer. (h) After the twenty-day period specified in Subsection (e), (f) or (g) of this section expires, perfection depends upon compliance with Chapter 55, Article 9 NMSA 1978. History: 1978 Comp., § 55-9-312, enacted by Laws 2001, ch. 139, § 32; 2005, ch. 144, § 102; 2023, ch. 142, § 62. OFFICIAL COMMENTS UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. 1. Source. Former Section 9-304 [55-9-304 NMSA 1978], with additions and some changes. 2. Instruments. Under Subsection (a), a security interest in instruments may be perfected by filing. This rule represents an important change from former Article 9, under which the secured party's taking possession of an instrument was the only method of achieving long-term perfection. The rule is likely to be particularly useful in transactions involving a large number of notes that a debtor uses as collateral but continues to collect from the makers. A security interest perfected by filing is subject to defeat by certain subsequent purchasers (including secured parties). Under Section 9-330(d) [55-9-330 NMSA 1978], purchasers for value who take possession of an instrument without knowledge that the purchase violates the rights of the secured party generally would achieve priority over a security interest in the instrument perfected by filing. In addition, Section 9-331 [55-9-3331 NMSA 1978] provides that filing a financing statement does not constitute notice that would preclude a subsequent purchaser from becoming a holder in due course and taking free of all claims under Section 3-306 [55-9-306 NMSA 1978]. 3. Chattel Paper; Negotiable Documents. Subsection (a) further provides that filing is available as a method of perfection for security interests in chattel paper and negotiable documents. Tangible chattel paper is sometimes delivered to the assignee, and sometimes left in the hands of the assignor for collection. Subsection (a) allows the assignee to perfect its security interest by filing in the latter case. Alternatively, the assignee may perfect by taking possession. See Section 9-313(a) [55-9-313 NMSA 1978]. An assignee of electronic chattel paper may perfect by taking control. See Sections 9-105 and 9-314(a) [55-9-105, 55-9-314 NMSA 1978, respectively]. The security interest of an assignee who takes possession or control may qualify for priority over a competing security interest perfected by filing. See Section 9-330 [55-9-330 NMSA 1978]. Negotiable documents may be, and usually are, delivered to the secured party. The secured party's taking possession will suffice as a perfection step. See Section 9-313(a). However, as is the case with chattel paper, a security interest in a negotiable document may be perfected by filing. 4. Investment Property. A security interest in investment property, including certificated securities, uncertificated securities, security entitlements, and securities accounts, may be perfected by filing. However, security interests created by brokers, securities intermediaries, or commodity intermediaries are automatically perfected; filing is of no effect. See Section 9-309(10) and (11) [55-9-309 NMSA 1978]. A security interest in all kinds of investment property also may be perfected by control, see Sections 9-105 and 9-314, and a security interest in a certificated security also may be perfected by the secured party's taking delivery under Section 8-301. See Section 9-313(a). A security interest perfected only by filing is subordinate to a conflicting security interest perfected by control or delivery. See Section 9-328(1) and (5) [55-9-328 NMSA 1978]. Thus, although filing is a permissible method of perfection, a secured party who perfects by filing takes the risk that the debtor has granted or will grant a security interest in the same collateral to another party who obtains control. Also, perfection by filing would not give the secured party protection against other types of adverse claims, since the Article 8 adverse claim cut-off rules require control. See Section 8-510 [55-8-510 NMSA 1978]. 4A. Controllable Accounts, Controllable Electronic Records, and Controllable Payment Intangibles. Consistent with the treatment of chattel paper, instruments, investment property, and negotiable documents, under Subsection (a) a security interest in controllable accounts, controllable electronic records, and controllable payment intangibles may be perfected by filing. A security interest in that collateral also may be perfected by control. Section 9-314. 5. Deposit Accounts. Under new Subsection (b)(1), the only method of perfecting a security interest in a deposit account as original collateral is by control. Filing is ineffective, except as provided in Section 9-315 [55-9-315 NMSA 1978] with respect to proceeds. As explained in Section 9-104 [55-9-104 NMSA 1978], "control" can arise as a result of an agreement among the secured party, debtor, and bank, whereby the bank agrees to comply with instructions of the secured party with respect to disposition of the funds on deposit, even though the debtor retains the right to direct disposition of the funds. Thus, Subsection (b)(1) takes an intermediate position between certain non-UCC law, which conditions the effectiveness of a security interest on the secured party's enjoyment of such dominion and control over the deposit account that the debtor is unable to dispose of the funds, and the approach this article takes to securities accounts, under which a secured party who is unable to reach the collateral without resort to judicial process may perfect by filing. By conditioning perfection on "control," rather than requiring the secured party to enjoy absolute dominion to the exclusion of the debtor, Subsection (b)(1) permits perfection in a wide variety of transactions, including those in which the secured party actually relies on the deposit account in extending credit and maintains some meaningful dominion over it, but does not wish to deprive the debtor of access to the funds altogether. 6. Letter-of-Credit Rights. Letter-of-credit rights commonly are "supporting obligations," as defined in Section 9-102 [55-9-102 NMSA 1978]. Perfection as to the related account, chattel paper, document, general intangible, instrument, or investment property will perfect as to the letter-of-credit rights. See Section 9-308(d) [55-9-308 NMSA 1978]. Subsection (b)(2) provides that, in other cases, a security interest in a letter-of-credit right may be perfected only by control. "Control," for these purposes, is explained in Section 9-107 [55-9-107 NMSA 1978]. 6A. Money. Under Subsection (b)(3), a security interest in tangible money may be perfected only by possession under Section 9-313 [55-9-313 NMSA 1978]. Similarly, under Subsection (b)(4), a security interest in electronic money may be perfected only by control under Section 9-314 [55-9-314 NMSA 1978]. 7. Goods Covered by Document of Title. Subsection (c) applies to goods in the possession of a bailee who has issued a negotiable document covering the goods. Subsection (d) applies to goods in the possession of a bailee who has issued a nonnegotiable document of title, including a document of title that is "non-negotiable" under Section 7-104 [55-7-104 NMSA 1978]. Section 9-313 governs perfection of a security interest in goods in the possession of a bailee who has not issued a document of title. Subsection (c) clarifies the perfection and priority rules in former Section 9-304(2) [55-9-304 NMSA 1978]. Consistently with the provisions of Article 7, Subsection (c) takes the position that, as long as a negotiable document covering goods is outstanding, title to the goods is, so to say, locked up in the document. Accordingly, a security interest in goods covered by a negotiable document may be perfected by perfecting a security interest in the document. The security interest also may be perfected by another method, e.g. , by filing. The priority rule in Subsection (c) governs only priority between (i) a security interest in goods which is perfected by perfecting in the document and (ii) a security interest in the goods which becomes perfected by another method while the goods are covered by the document. Example 1: While wheat is in a grain elevator and covered by a negotiable warehouse receipt, Debtor creates a security interest in the wheat in favor of SP-1 and SP-2. SP-1 perfects by filing a financing statement covering "wheat." Thereafter, SP-2 perfects by filing a financing statement describing the warehouse receipt. Subsection (c)(1) provides that SP-2's security interest is perfected. Subsection (c)(2) provides that SP-2's security interest is senior to SP-1's. Example 2: The facts are as in Example 1, but SP-1's security interest attached and was perfected before the goods were delivered to the grain elevator. Subsection (c)(2) does not apply, because SP-1's security interest did not become perfected during the time that the wheat was in the possession of a bailee. Rather, the first-to-file-or-perfect priority rule applies. See Section 9-322 [55-9-322 NMSA 1978]. A secured party may become "a holder to whom a negotiable document of title has been duly negotiated" under Section 7-501 [55-7-501 NMSA 1978]. If so, the secured party acquires the rights specified by article 7. Article 9 does not limit those rights, which may include the right to priority over an earlier-perfected security interest. See Section 9-331(a) [55-9-331 NMSA 1978]. Subsection (d) takes a different approach to the problem of goods covered by a nonnegotiable document. Here, title to the goods is not looked on as being locked up in the document. For example, a transferee that takes delivery of a nonnegotiable document receives, under Section 7-504(a) [55-7-504 NMSA 1978], "the title and rights" of the transferor, but the transferee would not thereby become a "person entitled under the document" with a right to receive delivery of the goods from the bailee. The secured party may perfect its security interest directly in the goods by filing as to them. The subsection provides two other methods of perfection: issuance of the document in the secured party's name (as consignee of a straight bill of lading or the person to whom delivery would be made under a non-negotiable warehouse receipt) and receipt of notification of the secured party's interest by the bailee. Issuance (or reissuance) of the nonnegotiable document in the secured party's name would allow the secured party to become a "person entitled under the document." However, the bailee's receipt of notification would not confer on the secured party the status of a person entitled unless the notification resulted from an instruction under the document. See Section 7-102(a)(9) [55-7-102 NMSA 1978] (defining "person entitled under the document") and Comment 6. Perfection under Subsection (d) occurs when the bailee receives notification of the secured party's interest in the goods, regardless of who sends the notification. Receipt of notification is effective to perfect, regardless of whether the bailee responds. Unlike pre-1998 Section 9-304(3) [55-9-304 NMSA 1978], from which it derives, Subsection (d) does not apply to goods in the possession of a bailee who has not issued a document of title. Section 9-313(c) [55-9-313 NMSA 1978] covers that case and provides that perfection by possession as to goods not covered by a document requires the bailee's acknowledgment. Subsection (a) makes clear that a security interest in negotiable documents (and other collateral mentioned there) may be perfected by filing, but it makes no mention of nonnegotiable documents. However, under the general rule of Section 9-310 [55-9-310 NMSA 1978], a security interest in a nonnegotiable document can be perfected by filing. A security interest in an electronic document, negotiable or nonnegotiable, can be perfected by control under Section 7-106 [55-7-106 NMSA 1978]. Section 9-314(a) [55-9-314 NMSA 1978]. But a security interest in a nonnegotiable tangible document cannot be perfected by possession. Section 9-313(a) [55-9-313 NMSA 1978]. Although a perfected security interest in a nonnegotiable document might provide useful benefits for the secured party, it would not perfect a security interest in the goods. And by perfecting a security interest in the nonnegotiable document the secured party would not thereby become a "person entitled under the document." Indeed, unless the secured party also took delivery of the document (i.e., possession or control under Section 1-201(b)(15)) [55-1-201 NMSA 1978], it would not obtain the rights of a transferee under Section 7-504(a) [55-7-504 NMSA 1978]. 8. Temporary Perfection Without Having First Otherwise Perfected. Subsection (e) follows pre-1998 Section 9-304(4) [55-9-304 NMSA 1978] in giving perfected status to security interests in certificated securities, instruments, and negotiable documents for a short period (reduced from 21 to 20 days, which is the time period generally applicable in this Article), although there has been no filing and the collateral is in the debtor's possession or control. The 20-day temporary perfection runs from the date of attachment. There is no limitation on the purpose for which the debtor is in possession, but the secured party must have given "new value" (defined in Section 9-102 [55-9-102 NMSA 1978]) under a signed security agreement. 9. Maintaining Perfection After Surrendering Possession. There are a variety of legitimate reasons - many of them are described in Subsections (f) and (g) - why certain types of collateral must be released temporarily to a debtor. No useful purpose would be served by cluttering the files with records of such exceedingly short term transactions. Subsection (f) affords the possibility of 20-day perfection in negotiable documents and goods in the possession of a bailee but not covered by a negotiable document. Subsection (g) provides for 20-day perfection in certificated securities and instruments. These subsections derive from former Section 9-305(5) [55-9-305 NMSA 1978]. However, the period of temporary perfection has been reduced from 21 to 20 days, which is the time period generally applicable in this article, and "enforcement" has been added in Subsection (g) as one of the special and limited purposes for which a secured party can release an instrument or certificated security to the debtor and still remain perfected. The period of temporary perfection runs from the date a secured party who already has a perfected security interest turns over the collateral to the debtor. There is no new value requirement, but the turnover must be for one or more of the purposes stated in Subsection (f) or (g). The 20-day period may be extended by perfecting as to the collateral by another method before the period expires. However, if the security interest is not perfected by another method until after the 20-day period expires, there will be a gap during which the security interest is unperfected. Temporary perfection extends only to the negotiable document or goods under Subsection (f) and only to the certificated security or instrument under Subsection (g). It does not extend to proceeds. If the collateral is sold, the security interest will continue in the proceeds for the period specified in Section 9-315 [55-9-315 NMSA 1978]. Subsections (f) and (g) deal only with perfection. Other Sections of this article govern the priority of a security interest in goods after surrender of the document covering them. In the case of a purchase-money security interest in inventory, priority may be conditioned upon giving notification to a prior inventory financer. See Section 9-324 [55-9-324 NMSA 1978]. 10. "Signed" Replaces "Authenticated." Consistent with the revised definition of "sign" in Section 1-201 [55-1-201 NMSA 1978], the cognate term "signed" replaces the reference to "authenticated" in the pre-2022 text of this section. Repeals and reenactments. — Laws 2001, ch. 139, § 32 repealed former 55-9-312 NMSA 1978, as amended by Laws 1996, ch. 47, § 68, and enacted a new section, effective July 1, 2001. The 2023 amendment, effective January 1, 2024, added "controllable accounts," "controllable electronic records" and "controllable payment intangibles" to existing provisions related to perfecting security interests, provided that a security interest in electronic money may be perfected only by control under Section 55-9-314 NMSA 1978; in the section heading, added "controllable accounts, controllable electronic records, controllable payment intangibles"; in Subsection (a), after "chattel paper", deleted "negotiable documents" and added "controllable accounts, controllable electronic records, controllable payment intangibles"; added Paragraph (b)(4); and in Subsection (e), after "given under", deleted "an authenticated" and added "a signed". The 2005 amendment, effective January 1, 2006, provides in Subsection (e) that a security interest in documents is perfected without taking control for a period of twenty days after it attaches.
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